Nassim Taleb is a non-conventional thinker. He is a mathematician and cares a lot about rigor and logic. He is a philosopher and cares about the consequences of theory on people’s life. This is reflected in his writings when theory (science) and practice (real life) are intertwined.
“Skin in the Game” is the 5th book in Nassim Taleb’s Incerto series. It deals with asymmetries in daily life (decision-making, risk management, politics, religion, etc.). This post summarizes some of the ideas of the book.
In the introduction, the author focuses on the idea that one cannot disentangle ethics and competence when dealing with human beings. What does it mean that you trust a professional? Do you trust their knowledge and skills? Or their ethics and moral values? Or both?
Some people have skin in the game, such as citizens, merchants, businessmen, entrepreneurs, artisans, etc. Others have no skin in the game such as bureaucrats, administrators, policy wonks, consultants, etc.
No-skin-in-the-game people keep the upside and transfer the downside to others. Skin-in-the-game people, on the other hand, take their own risk and keep their own downside.
Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.
The golden rule is: Treat others the way you would like them to treat you. The author argues that the following silver rule is more robust: Do not treat others the way you would not like them to treat you.
If Serving is below you, then Leadership is beyond you.
Salient events are easier to remember, so we give them more importance in our decisions. Psychologists call this simple fact “the Availability heuristic”, which is a cognitive bias.
Remember that cognitive biases are mental shortcuts that help us survive in a dangerous world, but they fool us in a complicated one. When you see a lion in the Serengeti, you need to run without thinking. But when you decide to buy a car, it would be better to avoid running to buy the one you see frequently in the ads and think thoroughly before making the decision.
Salient memories from one’s experience will impact its future decision, when searching for a job, a neighborhood, a partner, a vacation destination, etc. We focus on that specific event and forget about the rest. We make a poor decision, and we often regret it.
Plane crashes are so rare that everyone knows about them when they happen. Yet they seem to horrify people much more than car accidents, which cause many more victims… Sharks, Tsunamis, Terrorist attacks, etc. These are a salient cause of death, but they have, by far, the least number of victims compared to car accidents or medical errors.
The media are an enormous « availability bias » machine. Journalists and reporters are both victims and contributors to this social phenomenon. A journalist that reports “a plane departing from Berlin had landed safely in CDG airport this afternoon” will most probably lose his job. Continue reading “Outsmart the Availability Heuristic”
Checklists are a simple, powerful, yet often ignored, business tool. They provide a reliable and quick shortcut that improves our performance in the task at hand with less mental effort. Whether flying a plane, operating a surgery, troubleshooting a system, or making big decisions, checklists are always useful.
This post gives the reasons why checklists are paramount in some situations and emphasizes their importance in the process of decision-making.
A checklist is a pre-defined standard operating procedure to follow when performing a specific task. It is a proven business tool that improves performance and minimizes human errors and mental effort.
Both knowledge and experience contribute to checklist definition, in a closed feedback-loop fashion, where the checklist definition contributes to the knowledge and experience too.
Checklists are useful for frequent routines, which reduces the cognitive effort needed to perform them. Nevertheless, we can use them in any other task, profession or industry.
Simply put, we need to use checklists to perform some tasks because we cannot be sure we have considered all the details of the task at hand. Our brains have blind spots. Sometimes, we overlook even the most basic fact of the problem, which may lead in some circumstances to catastrophic results. In a hospital, for example, a nurse may treat the wrong patient if the name is not verified. Worse, a surgeon may operate the wrong patient! Yes, it happened and may happen again even for the highest skilled nurse and surgeon.
Here are some reasons why we are often unable to consider all the facets of the problem at hand:
Continue reading “Checklists: where the Disciplined Outperforms the Genius.”
Projects go over-budget and over-schedule; small ones, like renovating your kitchen, and huge ones, like constructing the Sydney Opera House. One main reason is our overconfident optimistic approach to planning. Behavioral psychologists call this the “Planning Fallacy“.
This post defines the concept of planning fallacy, gives examples of its consequences on some global projects, and provides some tips to mitigate it.
The planning fallacy is when we underestimate the time and resources needed to complete a project. We are often optimistic about our performance and the outcome of the project, so we take our desires for real plans.
The planning fallacy is a cognitive bias that fools our decision-making ability into considering the best-case scenario. It has a somewhat positive side, which is risk-taking. This cognitive bias allows us to take both small risks, such as opening a small business, and huge risks such as starting a war.
The following chart presents some major projects around the globe that went catastrophically over-budget. Notice the trend; the bigger the project, the higher the overbudget.
Among the methods to mitigate the planning fallacy, we present the major three: Continue reading “Outsmart The Planning Fallacy”
Title: Deep Work – Rules for Focused Success in a Distracted WorldThe population of “knowledge workers” is increasing with the shift towards an information economy. These workers, such as researchers, journalists, engineers, computer programmers, designers, etc. need “deep work” to be productive and creative. However, they often find themselves in a working environment where they are prone to distractions and frequent interruptions. They are losing calm offices to get open spaces, they spend their time in multitasking, jumping between meetings, chats, and emails, they are expected to remain available for instant messaging platforms, and sometimes they are forced onto social media.
Cal Newport addresses these topics in his book “Deep Work – Rules for Focused Success in a Distracted World”. He coined the term “Deep Work” to define the professional activities performed in a state of distraction-free concentration, and that stretches one’s capabilities to their limits.
The author argues that:
The book investigates several ways to incorporate deep work into our working habits, illustrated with real-life stories. Continue reading “Deep Work – Cal Newport”
There is nothing so practical as a good theory.
Kurt Lewin
Becoming a manager is a stressful, yet rewarding, experience. Beginners in management often fail in their first role. This is mainly because of their misconceptions about what it means to be the boss. In this post, you will find the main misconceptions about management, reality, and tips for successful leadership. The main misconceptions of the new managers are:
The more talented the subordinate, the less likely he/she is to follow orders.
